Rosebank South [2009] QBCCMCmr 352 (15 September 2009)

Last Updated: 9 October 2009

REFERENCE: 0772-2009

INTERIM ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Plan:	Rosebank South
GTP No.:	102509
Address of Parcel:	Hope island resort, Hope Island, QUEENSLAND

TAKE NOTICE that pursuant to an application made under sections 76 and 77(1) of the Building Units and Group Titles Act 1980 by Carl Smith, a co-owner of lot 16

I hereby order that as the application for a stay of referee’s order 508-2009 has been refused, the application for an Interim order that the Appeal against the order designated as Rosebank South GTP v Hope Island Resort PBC, seeking a stay pending outcome of Appeal, be immediately dismissed, on the basis that it was made without the requisite authority of the Rosebank South Body Corporate Is dismissed.

STATEMENT OF REFEREE’S REASONS FOR DECISION - 0772-2009

“Rosebank South”

APPLICATION

The applicant is the Body Corporate for Rosebank South which submitted a dispute resolution application under the Building Units and Group Titles Act 1980 with this office on 17 August 2009.

The applicant seeks the following Interim order:

An order that the Notice of Appeal against an order made by a Referee- 508-2009, designated as Rosebank South GTP v Hope Island Resort Principal Body Corporate, seeking a stay pending outcome of Appeal, be immediately dismissed, on the basis that it was made without the requisite authority of the Rosebank South Body Corporate.

The applicant also seeks the following final orders:

1. A declaration that the alleged direction purportedly given by the majority of those members of the Rosebank South body corporate present at an Extraordinary General Meeting (EGM) on 28 May 2009 to lodge a Dispute Application against the Hope Island resort Principal Body Corporate and to engage Herdlaw – the Body Corporate lawyers to lodge the Dispute Application be declared invalid on the basis that there was insufficient authority in accordance with Schedule 2, Part 2, 1(7) of BUGTA.
   
2. A declaration that the resolution purportedly passed by the Rosebank South body corporate committee to engage Herdlaw – the Body Corporate lawyers to act for the Rosebank South body corporate and lodge a Dispute Application (which became designated as reference no. 508-2009 “Rosebank South”) in the name of the name of the Rosebank South body corporate without the requisite authority of the Rosebank South body corporate, be declared invalid, on the basis that the vote in writing by a majority of the Rosebank South body corporate committee in favour of the proposed action was not achieved, in accordance with Schedule 4(7) of BUGTA.
   

BACKGROUND

The applicant states that he has been a co-owner of a lot in Rosebank South for 12 years, and a member of the committee for the last 4 years. He is currently the Secretary/ Treasurer of the body corporate committee but was not present at the informal committee meeting held on 28 May 2009 where it was decided to seek legal advice from Herdlaw.

Further, the applicant did not receive papers regarding the flying minute of 29 May in time to lodge a vote regarding the motions despite advising the Chairman of an alternative email address while he was on holidays. He also believes that the outcome of the resolution contained in the flying minute was improperly handled by the body corporate manager in that the votes received by the due time, (4pm on 1 June 2009) were insufficient as a quorum of the committee (2 yes votes and 1 no vote) and a majority of the committee (4 of 7 committee members) did not vote in favour of the resolution as required under BUGTA schedule 4(7), because the vote was only 3 in favour and 1 against.

The applicant further states that the events leading up to the lodgement of the application by the Rosebank South body Corporate committee were as follows:

• On 28 May an EGM was held to consider motions regarding the proposed management agreement for the Principal Body Corporate. It was noted that only 22 (25%) of 78 members were represented in person or by proxy at the meeting. An informal motion to obtain legal advice was raised from the floor and voted on by a show of hands. It is submitted that this resolution was invalid as there was no advance notice of the motion and no voting papers were issued;
• An informal meeting of 3 committee members then resolved to seek advice from Herdlaw.
• On 29 May a flying minute was issued requesting votes to be lodged by 4pm on 1 June. As at 4pm only 3 votes had been received but an additional vote was subsequently included. The applicant states that there was no quorum and the decision was not made by a majority of committee members;
• At 4 pm on 29 May a dispute resolution application was submitted with the Office of the Commissioner and this was done prior to committee approval and without the authority of a valid resolution by the body corporate;
• Members of the Rosebank South body corporate have been denied the opportunity to properly consider and vote upon the matter and are facing considerable expense outside the approved funding for the administrative fund budget;
• Certain members of the Rosebank South body corporate committee have exceeded their authority by seeking legal advice and making a dispute resolution application, imposing additional expenditure upon all lot owners and denying them the opportunity of achieving savings in fees paid for management of the principal body corporate;
• Other members of this body corporate hold views similar to that held by the applicant and the actions of certain committee members have contributed to the resignation of 2 committee members;
  

Pursuant to section 73 of the Building Units and Group titles Act 1980 I invited the body corporate committee to make submissions regarding the above prior to making a decision in respect of the application for an Interim Order.

In response, the following submissions were made on behalf of the body corporate committee:

• Three committee members met after the Rosebank South EGM on 28 May to discuss the proposed EGM for the PBC. The reason why only 3 members attended was that they were the only committee members that attended the Rosebank South EGM;
• The meeting was held without complying with the requirements of the legislation due to the perceived urgency involved, as there was only 1 business day available within which to make the application;
• At that meeting, the committee members resolved to :

Ratify existing legal expenditure;
Engage Herdlaw to correspond with the PBC;
Engage Herdlaw to seek an Interim Order;

• Subsequent to that meeting, a flying minute was circulated to formally approve the decision of the committee members on 28 May 2009;
• The body corporate manager circulated the flying minute with an instruction that the voting papers should be returned by 4pm on 1 June 2009;
• Of the 7 committee members at the time, 4 members voted and three abstained. Of the 4 votes, 3 were in favour and one was against;
• 4 committee votes had been received by 9.58 AM on 1 June 2009;
• The committee subsequently met on 6 August 2009 to consider if it would appeal the final order. There were 4 votes in favour of an appeal, 2 votes against, and the applicant abstained from voting;
  
• The resolution of the committee should be considered to have the effect of ratifying the decision to make the application, if in fact such ratification was necessary;
• Once the referee has made a decision in the application it is implicit that the action taken by the body corporate was properly authorised and an objection should have been raised when the original application was dealt with : Body Corpoprate for Pacific Breeze [2009] QBCCMC;
• The referee in this application does not have the power to dismiss a matter now before the tribunal on appeal from order.
  

DETERMINATION

The Interim Order sought by the applicant is as follows:
An order that the Notice of Appeal against an order made by a Referee- 508-2009, designated as Rosebank South GTP v Hope Island Resort Principal Body Corporate, seeking a stay pending outcome of Appeal, be immediately dismissed, on the basis that it was made without the requisite authority of the Rosebank South Body Corporate.

The Building Units and Group titles Act 1980 (the Act) applies to this scheme. Part 5 of the Act concerns disputes and Part 5, division 3 makes provision for orders by a referee. Within division 3, section 77 provides general powers of a referee to make orders. Relevantly, section 77(1) provides a general power that a referee may on application of a body corporate ... a proprietor ... in respect of a parcel, make an order on any person entitled to make an application under this subsection ... for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates and the applicant needs to establish that the circumstances warrant an interim order. An interim order will not be made if the only urgency relates to an applicant’s desire to resolve or expedite the matters in dispute, or where the nature of the circumstances are such that the matter is not capable of being dealt with in the context of an interim order. Of particular relevance is evidence that an interim order is necessary to prevent serious or irreparable harm.

As the parties are aware, on 29 May 2009, the Body Corporate Committee for Rosebank South made an application for both interim and final orders regarding a motion by the Principal Body Corporate to enter into a Management Agreement with Cambridge Management Services.
Based on the allegation contained in the application, I made an interim order preventing the Principal Body Corporate from acting upon a resolution upon that motion. This was a temporary order, made for the purpose of maintaining the status quo until such time as I was able to seek submissions from interested parties and to consider the issues in detail. Following receipt of detailed submissions from the principal body corporate, and the various residential bodies corporate, I declined to invalidate the motion and revoked the Interim order.

Solicitors acting for the Rosebank South Body corporate then appealed and also sought a stay of the final order. While an appeal against a Referee’s order must be heard by the Magistrates Court, an application for a stay is within the jurisdiction of a Referee. On 17 August 2009 I declined to grant the requested stay in the following terms:

“There is a considerable number of recent cases regarding the discretion of a Court or Tribunal to issue a stay pending the hearing of an appeal. These cases include Patrick Stevedores Operations No. 2 Pty Ltd v Maritime Union of Australia [1998] HCA 32 and
Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Limited [2008] HCA 9.

In Patrick, Hayne J. noted that the principles to be applied are well established and find
their most frequent use is “in order to preserve the subject-matter of litigation” i.e. to prevent the exercise of rights of appeal being rendered futile. He also recognised that it was important to consider first whether there is a substantial prospect of success; what effects the grant or refusal of a stay would have, and to consider where the balance of convenience.

This approach has been followed in Queensland. In Henley v State of Queensland [2002] QCA 510, Davies JA stated that the Queensland Court of Appeal had said “more than once” that special circumstances must be shown to justify a stay on appeal. His judgment referred to Federal Commissioner of Taxation v The Myer Emporium Limited [1986] HCA 13; (1986) 160 CLR 220 where, in the judgment of Dawson J, at 222-223, it was held that “special circumstances” justifying a stay “will exist where it is necessary to prevent the appeal, if successful, from being nugatory”:

In this case the applicant is appealing against my decision to dismiss the application for the following: An order that the motion at the Extraordinary General Meeting to be held on 1 June 2009 of the Hope Island Resort Principal Body Corporate whereby the PBC proposes to enter into the “Principal Body Corporate Management Agreement” with Cambridge Management Services Pty. Ltd. regarding work to be performed on the secondary thoroughfare, be declared invalid.

With respect to the Applicant, I can see little point in granting the requested stay because the Principal Body Corporate has already entered into the Management Agreement with Cambridge Management services and therefore it cannot be said that a stay of my decision is necessary to “preserve the subject-matter of litigation” or “to prevent the exercise of rights of appeal being rendered futile”. I therefore believe that the application for a stay of the order dated 21 July 2009 should be dismissed.”

Given that the application for a stay has already been dismissed, at this point in time it is not necessary for me to make an urgent determination as to whether or not the decision to appeal against order 508-2009, was made without the requisite authority of the Rosebank South Body Corporate. However, I note that this question remains relevant to the applicant’s request for the following final orders:

• A declaration that the alleged direction purportedly given by the majority of those members of the Rosebank South body corporate present at an Extraordinary General Meeting (EGM) on 28 May 2009 to lodge a Dispute Application against the Hope Island resort Principal Body Corporate and to engage Herdlaw – the Body Corporate lawyers to lodge the Dispute Application be declared invalid on the basis that there was insufficient authority in accordance with Schedule 2, Part 2, 1(7) of BUGTA.
  
• A declaration that the resolution purportedly passed by the Rosebank South body corporate committee to engage Herdlaw – the Body Corporate lawyers to act for the Rosebank South body corporate and lodge a Dispute Application (which became designated as reference no. 508-2009 “Rosebank South”) in the name of the name of the Rosebank South body corporate without the requisite authority of the Rosebank South body corporate, be declared invalid, on the basis that the vote in writing by a majority of the Rosebank South body corporate committee in favour of the proposed action was not achieved, in accordance with Schedule 4(7) of BUGTA.
  

This matter is now referred back to the Commissioner for consideration as to what further action should be taken in respect of this application. This may include seeking of further submissions and affording the applicant a right of reply to submissions.